Week-end roundup: Owlet in rebuilding mode including FDA submissions, Zus Health raises $40M, SpectrumAi’s autism therapy $20M Series A

Owlet Baby Care, developers of a baby sock health monitor (that TTA has followed since 2013!), is trying its best to pivot to profitability. After going public via the then-popular-like-hot-muffins SPAC route in early 2021, then being forced to pull its original Smart Sock off the market in November 2021 by the FDA due to medical device claims without 510(k) marketing clearance [TTA 16 Feb 22], it spent the first half of 2022 introducing the new Dream Sock and Dream Duo at retail, then in second half dramatically cutting back marketing spend and staff. Their 2022 revenue of $69.2 million dropped 8.7% from 2021’s $75.8 million in 2021, but operating expenses increased 18.7% for a net loss of $79.3 million last year. After last August’s layoffs, the company now has fewer than 100 people compared with 227 earlier in 2022. Another change in strategy: after spurning the FDA and the medical device clearance process before the SPAC, in October they filed for an FDA 510(k) for BabySat, a prescription device to alert on baby heart rate or blood oxygen saturation falls out of a prescribed range. In December, FDA accepted a de novo submission for an enhancement to Dream Sock that provides heart rate and oxygen notifications in addition to sleep monitoring tools (release). In February, it raised a $30 million private placement financing of convertible preferred stock.  Mobihealthnews, Owlet Q4/FY 22 earnings release, financing release

Two fundings of note even as Silicon Valley Bank and Signature Bank exit to the Bank Graveyard…

Point-of-care shared data platform Zus Health raises $40 million. Financing was raised from JAZZ Venture Partners, F-Prime Capital, Maverick Ventures, and Andreessen Horowitz (a16z). Zus Health is led by digital health veteran Jonathan Bush, founder of athenahealth, which he departed in 2018. The financing will be used to add new data sources, build workflow and referral tools, and introduce integration pathways so providers can use external patient data. Zus also announced a partnership with primary care EHR/tech company Elation Health to integrate the Zus Aggregated Profile to enable real-time access of expanded patient records from hospitals, clinics, labs, and pharmacies. Release, Mobihealthnews

SpectrumAi’s Series A raised $20 million from CVS Health Ventures with participation from Cobalt Ventures, and follow-on investments from seed investors F-Prime, Frist Cressey and Autism Impact Fund. SpectrumAi focus is to improve therapies in use for autism. Its Twyll EHR uses applied behavior analysis (ABA), a therapy used with autistic patients, plus Patterns, its network analytics platform, to improve data capture and objective measurement of ABA therapy. According to the release, “Autism is the fastest growing developmental disability in the United States driving unprecedented growth in the ABA industry. ABA is intensive and long-term therapy, averaging up to 25-40 hours each week. Measurement of ABA therapy’s efficacy to date has been limited to subjective parent and provider surveys.”

Funding roundup, 16 Feb: virtual mental health gains two (more) unicorns, Zocdoc’s fresh $150M, Owlet’s $325M SPAC

Virtual behavioral health continues its hot run with two companies’ funding launching them into Unicorn Stratosphere valuations. The latest is San Francisco-based Modern Health which closed a $74 million Series D investment round, led by Founders Fund with participation from Lachy Groom. Total funding now exceeds $167 million over the past two years. The company claims a valuation of $1.17 bn plus status as the fastest entirely women-founded company in the US to hit the magic unicorn mark. Modern Health provides for about 220 mid-sized companies an app platform combining therapy, coaching, and self-guided courses in 35 languages. On 1 February, Modern Health acquired Kip, another mental health platform that was also woman-founded, for an undisclosed amount.

In January, corporate mental health provider, Lyra Health, gained a Series E of $187 million, bringing its valuation to $2 bn. Lyra claims 2 million members in large companies like Pillsbury, Uber, and Morgan Stanley. Talkspace, a direct-to-consumer digital therapy provider, went public earlier in January via a $1.4 bn SPAC. [TTA 29 Jan] According to Crunchbase News, among mental health startups, 141 were venture-backed within five years to the tune of $1.3 bn in investment. The pandemic and ‘lockdown loneliness’, as we’ve noted, kicked digital health and mental health funding into overdrive. FierceHealthcare, Crunchbase 

Patient appointment setter Zocdoc also gathered $150 million in fresh funding–what’s termed growth financing from Francisco Partners, bringing their total financing to $376 million in 10 rounds. Zocdoc has changed its model in the past two years from a subscription basis–priced per provider–to a per-booking charge. They also added virtual visits. Zocdoc now claims to be profitable and has grown its network by 50 percent in some states. It was one of the early healthcare unicorns, controversial in its business practices as far back as 2016, with customer churn, low margins, and high customer acquisition costs leading to unprofitability [TTA 11 May 2016, 21 Jan 2019], plus a former CEO suing about his ouster after eight years. HISTalk, Zocdoc release

Owlet socks it to a Q2 SPAC. Baby monitoring system Owlet Baby Care becomes a unicorn of just over $1 bn through a SPAC (special purpose acquisition company) merger with Sandbridge Acquisition Corporation, backed by Sandbridge Capital and PIMCO private funds. It will trade on the NYSE (OWLT) and close in Q2. Anticipated value is as much as $325 million through cash ($230 million) and concurrent private placement (PIPE) of common stock ($130 million). Owlet started in 2013 with a ‘Smart Sock’ (left) using pulse oximetry to monitor baby heart rate, oxygen levels, and sleep patterns with readouts via their app, but has expanded to include an Owlet Cam. Owlet stated 50 percent revenue growth in 2020 after approximately $50 million in net revenue for 2019. Amazingly, Owlet in seven years raised a modest $48 million through 27 investors concluding with a two-year Series B. Awwww-worthy indeed. Release, Mobihealthnews